LONDON: Philip Green has suffered a 7 per cent decline in UK revenues at his Arcadia Group fashion empire, hit by pickier shoppers and the closure of hundreds of concessions following the demise of department store chain BHS. Revenues at his flagship Topshop label, which is one-quarter owned by Los Angeles-based fund manager, Leonard Green, fell nearly 2 per cent in the year to August 2016. Topshop’s international arm suffered a sharper reversal of 6 per cent, despite an expansion programme that in December brought the announcement of its first openings in mainland China. Arcadia’s parent company, Taveta Investments, derived £1.7bn of revenue from the UK in 2016, according to its latest accounts released by Companies House on Wednesday. That marked a fall from £2.2bn a year earlier, although up to £370m of that related to discontinued operations such as BHS, which was sold in 2015. With those operations excluded, UK revenue fell by £135m, FT calculations show.
BHS failed barely a year after Sir Philip sold it to an ex-bankrupt with no retail experience who proved unable to stem its losses. That forced Arcadia to pull 307 concessions out of defunct BHS stores, where it had continued to sell clothes under labels such as Dorothy Perkins, Evans and Burton after the department store was sold. It also triggered threats of legal action by the Pensions Regulator and ended with Sir Philip paying £363m to cover some of the liabilities of its insolvent pension scheme. Arcadia also doubled payments to its pension scheme, where the net liability has soared over the past year as bond yields fell. However, the company’s contributions of £50m a year mean that the £426m deficit will be cleared in less than a decade.
Arcadia’s parent company is still paying off loan notes issued to companies owned by Sir Philip’s wife, Tina, when it bought BHS in 2009. Taveta Investments paid £26m in interest and capital repayments on the bonds in the past year. The fashion conglomerate said more “value conscious” consumers, as well as proliferating competition and economic uncertainty following the Brexit vote, were creating challenging conditions on the high street. It emerged at the weekend that Sir Philip had given McKinsey, the consultants, a broad remit to review strategy at Topshop. Meanwhile, at UK rival New Look, bond prices plummeted on Tuesday after the retailer reported a sharp drop in full-year earnings. The company’s unsecured debt fell 25 points in secondary market trading, to just 53p in the pound.
